China’s economy showed stable growth in May, despite the pinch from tariffs and the ongoing trade war with the United States.

Retail sales in China grew by 6.4%, year-over-year in May, according to China’s National Board of Statistics (NBS), overshadowing the 5.1% increase in April. Growth in sales is aided in part by the government trade-in program that offers consumers discounts for new appliances and other goods.

Industrial production grew 5.8% from January to May, according to Reuters, a slight decrease from the 6.1% growth seen in the first four months of the year. Investment in buildings, factories and other fixed costs also slowed to 3.7% during the first four months of the year, a minor decline compared to the 4% growth seen during the same period in 2024. The decrease in investment signifies a larger slowdown in real estate investment, with property investment dropping 10.7% year-over-year in May.

Friction between the U.S. and China has escalated since the beginning of the year, with U.S. President Donald Trump levying increasingly large tariffs on imports from China. Tensions have cooled between the two countries, as officials from both administrations met in London and reached a tentative agreement on the tariff framework last week. The deal sheds Chinese export restrictions on rare earth minerals, which are critical to the manufacturing of car engines and military aircrafts, and allows Chinese students to attend universities in the U.S.

“Our deal with China is done, subject to final approval with President Xi [Jinping] and me,” Trump said in a Truth Social post, per Reuters. “Full magnets, and any necessary rare earths, will be supplied, up front, by China. Likewise, we will provide to China what was agreed to, including Chinese students using our colleges and universities (which has always been good with me!). We are getting a total of 55% tariffs, China is getting 10%.”

The current tariff rate of 55% is the sum of the baseline 10% “reciprocal” tariff, the 20% punitive tariff imposed on China, Mexico and Canada per Trump’s accusation that the three countries facilitate the flow of the drug fentanyl into the U.S. and the 25% tariff imposed on China during Trump’s first administration.

Despite the tentative deal, analysts warn that the trade tensions are not fully resolved yet, and there’s no definite end to negotiations over the tariff framework. Ongoing tension between two of the world’s largest economies has the potential to send ripples across supply chains.

For credit mangers with customers in China, 94% find that their sales are to existing customers and only 6% are to new customers. According to FCIB’s Credit and Collections Survey, 33% of credit managers do not extend credit to customers in China. Additionally, 28% of credit managers offer 1-30 day terms, 6% offer 31-60 day terms, 22% offer 61-90 day terms and 11% offer over 90 day terms.

On average, customers in China are 16 days beyond terms, with 33% of respondents finding that payment delays are increasing. Delays are mostly attributed to billing disputes (55%), customer payment policy (36%), regulatory issues (27%) and government approval (27%).

“Ensure you have local data on customers,” one respondent wrote on working with customers in China. “China is not required to share as much insight as other countries.”

“It’s important to know your customer’s payment process to avoid misunderstandings or delays due to administrative issues,” another respondent wrote.